CASE #1 (DIGEST) Cornelia MATABUENA plaintiff-appellant v Petronila CERVANTES defendant-appellee [G.R. No. L-28771. March 31, 1971] [G.R.

No. L-28771. March 31, 1971] TOPIC: Nature and concept of statutory

pressure and influence upon the donor, a prejudice deeply rooted in our ancient law then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without benefit of nuptials. CASE # 2 G.R. No. 154645. July 13, 2004] MILAGROS JOAQUINO a.k.a. MILAGROS J. REYES, petitioner, vs. LOURDES all surnamed REYES, respondents. DECISION PANGANIBAN, J.: Though registered in the paramours name, property acquired with the salaries and earnings of a husband belongs to his conjugal partnership with the legal spouse. The filiation of the paramours children must be settled in a probate or special proceeding instituted for the purpose, not in an action for recovery of property. The Case Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to nullify the February 4, 2002 Decision[2] and the August 14, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 45883. The CA disposed as follows: WHEREFORE, hereby partially premises considered, the appeal is DENIED and the Decision dated May REYES,

construction FACTS: The stipulated facts agreed upon by both the plaintiff and the defendant assisted by their respective counsels, are:1. The deceased Felix Matabuena owned the property in question;2. Felix Matabuena executed a Deed of Donation inter vivos (referring to a transfer or gift made during one's lifetime, as opposed to a testamentary transfer which is a gift that takes effect on death) in favor of defendant, Petronila Cervantes over the parcel of land in question on February 20, 1956, which same donation was accepted by defendant;3. The donation of the land to Petronila (defendant) which took effect immediately was made during the common law relationship as husband and wife, they were married on March 28, 1962;4. The deceased Felix Matabuena died intestate on September 13, 1962;5. The plaintiff claims the property by reason of being the only sister and nearest collateral relative of the deceased by virtue of an affidavit of self-adjudication executed by her in 1962 and had the land declared in her name and paid the estate and inheritance taxes thereon. Cornelia (plaintiff-appellant), sister of Felix Matabuena maintains that the donation made by Felix to Petronila Cervantes (defendant-appellee) was void because they were living without the benefit of marriage (common law marriage). This is in pursuant to Article 133 of Civil Code which provides: Every donation between the spouses during the marriage shall be void. On 23 November 1965, the lower court upheld the validity of the donation as it was made before Cervantes marriage to the donor, hence, this appeal. ISSUE: WON the ban on a donation between the spouses during a marriage applies to a common-law relationship HELD: The lower court decision of November 23, 1965 dismissing the complaint with costs is REVERSED. The questioned donation is declared void, with the rights of plaintiff and defendant as pro indiviso (for an undivided part). The case is remanded to the lower court for its appropriate disposition in accordance with the above opinion. RATIO: It is a principle of statutory construction that what is within the spirit of the law is as much a part of it as what is written. If there is ever any occasion where the principle of statutory construction that what is within the spirit of the law is as much a part of it as what is written, then such would be it. Otherwise the basic purpose discernible in such codal provision would not be attained. A 1954 Court of Appeals decision Buenaventura v. Bautista, interpreting a similar provision of the old Civil Code says clearly that if the policy of the law is (in the language of the opinion of the then Justice J.B.L. Reyes of that Court) "to prohibit donations in favor of the other consort and his descendants because of fear of undue and improper

MERCEDES, MANUEL, MIRIAM and RODOLFO JR. --

30, 1994, of the Regional Trial Court of Pasay City, Branch 111 in Civil Case No. 9722-P is MODIFIED to read, as follows: WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant as follows: a. Declaring the house and lot registered under Transfer Certificate of Title No. 90293 (26627-A) of the Registry of Deeds of Metro Manila, District IV as conjugal partnership property of the late Spouses Rodolfo and Lourdes Reyes; b. Ordering the [petitioner] to surrender possession of said subject property, pursuant to the applicable law on succession, to the respective estates of the late Rodolfo Reyes and Lourdes Reyes and to pay a reasonable rental of P10,000.00 a month, to the same juridical entities, upon their failure to do so until possession of the property is delivered; and c. To pay [respondents] attorneys fees in the sum of P20,000.00 and to pay the costs.[4] The questioned Resolution, on the other hand, denied petitioners Motion for Reconsideration. The Facts The CA narrated the facts as follows: [Respondents] filed a Complaint for reconveyance and damages, dated January 23, 1982, before the Court of First Instance of Rizal, containing the following allegations: x x x The complaint alleges that [respondent] Lourdes P. Reyes is the widow of Rodolfo A. Reyes who died on September 12, 1981; that [respondents] Mercedes, Manuel, Miriam and Rodolfo, Jr. are the legitimate children of [respondent] Lourdes P. Reyes and the deceased Rodolfo A. Reyes; that for years before his death, Rodolfo A. Reyes had

illicit relations with [petitioner] Milagros B. Joaquino; that before his death, x x x Rodolfo A. Reyes was Vice President and Comptroller of Warner Barnes and Company with an income of P15,000.00 a month and, after retirement on September 30, 1980, received from said company benefits and emoluments in the amount of P315,0[1]1.79; that [respondent] wife was not the recipient of any portion of the said amount. The complaint further alleges that on July 12, 1979, a [D]eed of [S]ale of a property consisting of a house and lot at BF Homes, Paraaque, Metro Manila was executed by the spouses Ramiro Golez and Corazon Golez in favor of [petitioner] Milagros B. Joaquino for which Transfer Certificate of Title No. 90293 of the Register of Deeds of Metro Manila, District IV was issued in the name of [petitioner] Milagros B. Joaquino; that the funds used to purchase this property were conjugal funds and earnings of the deceased Rodolfo A. Reyes as executive of Warner Barnes and Company as [petitioner] Joaquino was without the means to pay for the same; that [petitioner] executed a Special Power of Attorney in favor of Rodolfo A. Reyes to mortgage the property to Commonwealth Insurance Corporation in order to pay the balance of the purchase price; that said Rodolfo A. Reyes executed a mortgage in favor of Commonwealth Insurance Corporation for P140,000.00 and to guaranty payment thereof, he secured a life insurance [policy] with Philam Life Insurance Corporation for the said amount, assigning the proceeds thereof to Commonwealth Insurance Corporation; that the monthly amortizations of the mortgage were paid by said Rodolfo A. Reyes before his death and at the time of his death, the outstanding balance of P110,000.00 was to be paid out of his Philam Life Insurance [p]olicy. The complaint finally alleges that the deceased had two cars in [petitioners] possession and that the real and personal properties in [petitioners] possession are conjugal partnership propert[ies] of the spouses Lourdes P. Reyes and Rodolfo A. Reyes and one-half belongs exclusively to [respondent] Lourdes P. Reyes and the other half to the estate of Rodolfo A. Reyes to be apportioned among the [other respondents] as his forced heirs. [Respondents] therefore, pray that the property covered by T.C.T. No. 90293 be declared conjugal property of the spouses Lourdes P. Reyes and Rodolfo A. Reyes and that [petitioner] be ordered to reconvey the property in [respondents] favor; that the two cars in [petitioners] possession be delivered to [respondents] and that [petitioner] be made to pay actual, compensatory and moral damages to [respondents] as well as attorneys fees. xxx xxx xxx [Petitioner] eventually filed her Answer, dated August 1, 1982, the allegations of which have been summarized by the trial court in the following manner: In her Answer, [petitioner] Milagros B. Joaquino alleges that she purchased the real property in question with her own exclusive funds and it was only for convenience that the late Rodolfo Reyes facilitated the mortgage over the same; that although the late Rodolfo Reyes paid the monthly amortization of the mortgage as attorney-in-fact of [petitioner], the money came exclusively from [her].

[Petitioner] further alleges in her answer, by way of special and affirmative defenses, that during all the nineteen (19) years that [she] lived with Rodolfo Reyes from 1962 continuously up to September 12, 1981 when the latter died, [petitioner] never had knowledge whatsoever that he was married to someone else, much less to [respondent] Lourdes P. Reyes; that [petitioner] was never the beneficiary of the emoluments or other pecuniary benefits of the late Rodolfo Reyes during his lifetime or after his death because [she] had the financial capacity to support herself and her children begotten with the late Rodolfo Reyes. [Petitioner] prays for a judgment dismissing [respondents] complaint and for t he latter to pay unto [petitioner] moral and exemplary damages in such amounts as may be determined during the trial, including atto[r]neys fees and the costs of the suit. x x x. xxx xxx xxx On February 2, 1993, [respondent] Lourdes Reyes died. Subsequently, the trial court granted the complaint based on the following factual findings: Lourdes Reyes was legally married to Rodolfo Reyes on January 3, 1947 in Manila. They have four children, namely: Mercedes, Manuel, Miriam and Rodolfo Jr., all surnamed Reyes and co-[respondents] in this case. Rodolfo Reyes died on September 12, 1981. At the time of his death, Rodolfo Reyes was living with his common-law wife, Milagros Joaquino, x x x with whom she begot three (3) children namely: Jose Romillo, Imelda May and Charina, all surnamed Reyes. During his lifetime, Rodolfo Reyes worked with Marsman and Company and later transferred to Warner Barnes & Co., where he assumed the position of Vice-President [Comptroller] until he retired on September 30, 1980. His monthly salary at Warner Barnes & Co. was P15,000.00 x x x and upon his separation or retirement from said company, Rodolfo Reyes received a lump sum of P315,011.79 in full payment and settlement of his separation and retirement benefits. During the common-law relationship of Rodolfo Reyes and [petitioner] Milagros Joaquino and while living together, they decided to buy the house and lot situated at No. 12 Baghdad Street, Phase 3, BF Homes, Paraaque, Metro Manila. A Deed of Absolute Sale dated July 12, 1979 was executed in favor of [petitioner] Milagros Joaquino and Transfer Certificate of Title No. S-90293 covering the said property was issued in the name of [petitioner only] on July 20, 1979. To secure the finances with which to pay the purchase price of the property in the amount of P140,000.00, [petitioner] executed on July 20, 1979, a Special Power of Attorney in favor of Rodolfo A. Reyes for the latter, as attorney-in-fact, to secure a loan from the Commonwealth Insurance Company. An application for mortgage loan was filed by Rodolfo Reyes with the Commonwealth Insurance Company and a Real Estate Mortgage Contract was executed as collateral to the mortgage loan. The loan was payable in ten (10) years with a monthly amortization of P1,166.67. The monthly amortizations were paid by Rodolfo Reyes and after his death, the balance of P109,797.64 was paid in full to the

Commonwealth Insurance by the Philam Life Insurance Co. as insurer of the deceased Rodolfo A. Reyes.
[5]

Whether or not the Supreme Court should enforce the rule that the parties to a lawsuit should only tell the truth at the trial and in [their] pleadings x x x. V. Whether or not the legitimate children of the late Rodolfo Reyes should respect their fathers desire that his illeg itimate children should have a home or a roof over their heads in consonance with his duty to love, care and provide for his children even after his death.[7] The issues boil down to the following: 1) the nature of the house and lot on Baghdad Street (BF Homes Paraaque, Metro Manila); and 2) the propriety of ruling on the filiation and the successional rights of petitioners children. The Courts Ruling The Petition is devoid of merit. First Issue:

On appeal to the CA, petitioner questioned the following findings of the trial court: 1) that the house and lot had been paid in full from the proceeds of the loan that Rodolfo Reyes obtained from the Commonwealth Insurance Company; 2) that his salaries and earnings, which were his and Lourdes conjugal funds, paid for the loan and, hence, the disputed property was conjugal; and 3) that petitioners illegitimate children, not having been recognized or acknowledged by him in any of the ways provided by law, acquired no successional rights to his estate. Ruling of the Court of Appeals Affirming the RTC, the CA held that the property had been paid out of the conjugal funds of Rodolfo and Lourdes because the monthly amortizations for the loan, as well as the premiums for the life insurance policy that paid for the balance thereof, came from his salaries and earnings. Like the trial court, it found no sufficient proof that petitioner was financially capable of buying the disputed property, or that she had actually contributed her own exclusive funds to pay for it. Hence, it ordered her to surrender possession of the property to the respective estates of the spouses. The appellate court, however, held that the trial court should not have resolved the issue of the filiation and the successional rights of petitioners children. Such issues, it said, were not properly cognizable in an ordinary civil action for reconveyance and damages and were better ventilated in a probate or special proceeding instituted for the purpose. Hence, this Petition.[6] Issues Petitioner submits the following issues for the Courts consideration: I. Whether or not it has been indubitably established in a court of law and trier of facts, the Regional Trial Court, that petitioners three [3] illegitimate children are x x x indeed the children of the late Rodolfo Reyes. II. Whether or not it is legally permissible for [respondents] to make a mockery of the law by denying [the] filiations of their [two] 2 illegitimate sisters and one [1] illegitimate brother when in fact the very complaint filed by their mother, the lawful wife, Lourdes[,] shows that her husband Rodolfo had illicit relations with the petitioner Milagros and had lived with her in a house and lot at Baghdad Street. III. Whether or not the fact that the Court of Appeals made a finding that the house and lot at Baghdad Street are conjugal property of lawfully wedded Rodolfo and Lourdes including the insurance proceeds which was used to pay the final bill for the house and lot, this will prevail over Articles 19 and 21 of the Civil Code. IV.

The Conjugal Nature of the Disputed Property

Before tackling the merits, we must first point out some undisputed facts and guiding principles. As to the facts, it is undisputed that the deceased Rodolfo Reyes was legally married to Respondent Lourdes Reyes on January 3, 1947.[8] It is also admitted that for 19 years or so, and while their marriage was subsisting, he was actually living with petitioner. It was during this time, in 1979, that the disputed house and lot was purchased and registered in petitioners name. Plainly, therefore, the applicable law is the Civil Code of the Philippines. Under Article 145 thereof, a conjugal partnership of gains (CPG) is created upon marriage[9] and lasts until the legal union is dissolved by death, annulment, legal separation or judicial separation of property.[10]Conjugal properties are by law owned in common by the husband and wife.[11] As to what constitutes such properties are laid out in Article 153 of the Code, which we quote: (1) That which is acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses; (2) That which is obtained by the industry, or work, or as salary of the spouses, or of either of them; (3) The fruits, rents or interests received or due during the marriage, coming from the common property or from the exclusive property of each spouse. Moreover, under Article 160 of the Code, all properties of the marriage, unless proven to pertain to the husband or the wife exclusively, are presumed to belong to the CPG. For the rebuttable presumption to arise, however, the properties must first be proven to have been acquired during the existence of the marriage.[12] The law places the burden of proof[13] on the plaintiffs (respondents herein) to establish
[14]

their

claim

by

preponderance of evidence oppose it.[15]

-- evidence that has greater

weight or is more convincing than that which is offered to On the other hand, Article 144[16] of the Civil Code mandates a co-ownership between a man and a woman who are living together but are not legally married. Prevailing jurisprudence holds, though, that for Article 144 to apply, the couple must

not be incapacitated to contract marriage.[17] It has been held that the Article is inapplicable to common-law relations amounting to adultery or concubinage, as in this case. The reason therefor is the absurdity of creating a co-ownership in cases in which there exists a prior conjugal partnership between the man and his lawful wife.[18] In default of Article 144 of the Civil Code, Article 148 of the Family Code has been applied.
[19]

Inc. until his retirement on September 30, 1980, upon which he received a sizeable retirement package; [22] 2) that at exactly the same time the property was allegedly purchased,[23] he applied for a mortgage loan[24] -- intended for housing[25] -from the Commonwealth Insurance Company; 3) that he secured the loan with a real estate mortgage[26] over the same property; 4) that he paid the monthly amortizations for the loan[27] as well as the semi-annual premiums[28] for a Philam Life insurance policy, which he was required to take as additional security; and 5) that with the proceeds of his life insurance policy, the balance of the loan was paid to Commonwealth by Philam Life Insurance Company.[29] All told, respondents have shown that the property was bought during the marriage of Rodolfo and Lourdes, a fact that gives rise to the presumption that it is conjugal. More important, they have established that the proceeds of the loan obtained by Rodolfo were used to pay for the property; and that the loan was, in turn, paid from his salaries and earnings, which were conjugal funds under the Civil Code. In contrast, petitioner has failed to substantiate either of her claims -- that she was financially capable of buying the house and lot, or that she actually contributed to the payments therefor. Indeed, it does not appear that she was gainfully employed at any time after 1961[30] when the
[31]

The latter Article provides:

Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption shall apply to joint deposits of money and evidence of credit. If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community or conjugal partnership existing in such valid marriage. If the party which acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner provided in the last paragraph of the preceding Article. The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith. Thus, when a common-law couple have a legal impediment to marriage, only the property acquired by them -- through their actual joint contribution of money, property or industry - shall be owned by them in common and in proportion to

property

was

purchased. Hearsay are the Affidavits

and the undated

Certification[32] she had presented to prove that she borrowed money from her siblings and had earnings from a jewelry business. Respondents had not been given any opportunity to cross-examine the affiants, who had not testified on these matters. Based on the rules of evidence, the Affidavits and the Certification have to be rejected. In fact, they have no probative value.[33] The CA was also correct in disregarding petitioners allegation that part of the purchase money had come from the sale of a drugstore[34] four years earlier. Under the circumstances, therefore, the purchase and the subsequent registration of the realty in petitioners name was tantamount to a donation by Rodolfo to Milagros. By express provision of Article 739(1) of the Civil Code, such donation was void, because it was made between persons who were guilty of adultery or concubinage at the time of the donation. The prohibition against donations between spouses[35] must likewise apply to donations between persons living together in illicit relations; otherwise, the latter would be better situated than the former.[36] Article 87 of the Family Code now expressly provides thus: Art. 87. Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The

their respective contributions.

With these facts and principles firmly settled, we now proceed to the merits of the first issue. The present controversy hinges on the source of the funds paid for the house and lot in question. Upon the resolution of this issue depends the determination of whether the property is conjugal (owned by Rodolfo and Lourdes) or exclusive (owned by Milagros) or co-owned by Rodolfo and Milagros. The above issue, which is clearly factual, has been passed upon by both the trial and the appellate courts, with similar results in favor of respondents. Such finding is generally conclusive; it is not the function of this Court to review questions of fact.
[20]

Moreover, it is well-settled that only errors of law and not of facts are reviewable by this Court in cases brought to it from the Court of Appeals or under Rule 45 of the Rules of Court.[21] This principle applies with greater force herein, because the CA came up with the same factual findings as those of the RTC. Even then, heeding petitioners plea, we have gone through the pleadings and the evidence presented by the parties to find out if there is any circumstance that might warrant a reversal of the factual findings. Unfortunately for petitioner, we have found none. Indeed, a preponderance of evidence has duly established that the disputed house and lot was paid by Rodolfo Reyes, using his salaries and earnings. By substantial evidence, respondents showed the following facts: 1) that Rodolfo was gainfully employed as comptroller at Warner, Barnes and Co.,

prohibition shall also apply to persons living together as husband and wife without a valid marriage. (Italics supplied)
Regarding the registration of the property in petitioners name, it is enough to stress that a certificate of title under the Torrens system aims to protect dominion; it cannot be used as an instrument for the deprivation of ownership.[37] It has been held that property is conjugal if acquired in a common-law relationship during the subsistence of a

preexisting legal marriage, even if it is titled in the name of the common-law wife. we quote: Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. The registration of the property in petitioners name was clearly designed to deprive Rodolfos legal spouse and compulsory heirs of ownership. By operation of law, petitioner is deemed to hold the property in trust for them. Therefore, she cannot rely on the registration in repudiation of the trust, for this case is a well-known exception to the principle of conclusiveness of a certificate of title. Second Issue:
[39] [38]

filiation of her children was not the subject of inquiry and was in fact not duly established in this case. Thus, she could not have shown that respondents had acted in bad faith or with intent to prejudice her children. These are conditions necessary to show that an act constitutes an abuse of rights under Article 19.[51] She also failed to show that respondents -in violation of the provisions of Article 21 of the Civil Code -had acted in a manner contrary to morals, good customs or public policy. Moreover, we note that the issue concerning the applicability of Articles 19 and 21 was not raised by petitioner in the trial court or even in the CA. Hence, she should not be permitted to raise it now. Basic is the rule that parties may not bring up on appeal issues that have not been raised on trial. WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution of the Court of Appeals AFFIRMED. Costs against petitioner. SO ORDERED.

In this case, a constructive trust is

deemed created under Article 1456 of the Civil Code, which

Ruling on Illegitimate Filiation Not Proper

It is petitioners alternative submission that her children are entitled to a share in the disputed property, because they were voluntarily acknowledged by Rodolfo as his children. Claiming that the issue of her childrens illegitimate filiation was duly established in the trial court, she faults the CA for ruling that the issue was improper in the instant case. Her position is untenable. Indeed, it has been ruled that matters relating to the rights of filiation and heirship must be ventilated in the proper probate court in a special proceeding instituted precisely for the purpose of determining such rights.[40] Sustaining
[41]

Davide,

Jr.,

C.J.,

(Chairman),

Ynares-Santiago,

Carpio, and Azcuna, JJ., concur.

the

appellate court in Agapay v. Palang,

this Court held that

the status of an illegitimate child who claimed to be an heir to a decedents estate could not be adjudicated in an ordinary civil action which, as in this case, was for the recovery of property. Considerations of due process should have likewise deterred the RTC from ruling on the status of petitioners children. It is evident from the pleadings of the parties that this issue was not presented in either the original[42] or the Supplemental Complaint[43] for reconveyance of property and damages; that it was not pleaded and specifically prayed for by petitioner in her Answers[44] thereto; and that it was not traversed by respondents Reply to the Supplemental Complaint.[45] Neither did petitioners Memorandum,[46] which was submitted to the trial court, raise and discuss this issue. In view thereof, the illegitimate filiation of her children could not have been duly established by the proceedings as required by Article 887 of the Civil Code.[47] In view of the foregoing reasons, the CA cannot be faulted for tackling the propriety of the RTCs ruling on the status of the children of petitioner, though she did not assign this matter as an error. The general rule -- that only errors assigned may be passed upon by an appellate court admits of exceptions. Even unassigned errors may be taken up by such court if the consideration of those errors would be necessary for arriving at a just decision or for serving the interest of justice.[48] The invocation by petitioner of Articles 19[49] and 21[50] of the Civil Code is also unmeritorious. Clearly, the illegitimate